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What the Federal Budget Means for Retailers – Experts Weigh In
The Federal Budget was released last night – what are some of the immediate benefits, what does it mean for retailers? We asked the experts.
The cost-of-living measures announced in the budget, arguably the centrepiece of the plan, is said to be a benefit for retailers in the short term, but some experts argue that it could not benefit those in the long run.
Support from SMEs to upskill staff and enhance digital capabilities have been welcomed across the board, but many experts are asking for further support for long-term resilience as the industry faces unprecedented challenges.
Dominique Lamb, the CEO of the National Retail Association, explained that strong spending flows to the business bottom lines, aims at boosting consumer spending, training and skills development.
“Consumer cash flow is the lifeblood of many small retail businesses, and fuel excise cuts and cash handouts will help counteract the steep revenue drop experienced at the beginning of the year,” she explained.
Moreover, she explained that the pandemic-fuelled issues of the economy may benefit from the budget. “The budget is taking steps towards economic recovery for the businesses and people heavily impacted by the effects of the pandemic,” she said.
The Federal budget further predicted that unemployment rates are predicted to drop to 3.75 percent by the September quarter, the lowest it has been since 1974. Lamb welcomed this news, explaining that the government could further drive this figure by investing and implementing training for entry-level workers in the retail sector.
“The retail sector is one of the nation’s largest employers and has the potential to drive the economic recovery if there are enough skilled workers. Often retail is overlooked, so we call for training resources to be focused on the retail and hospitality sector in the year ahead,” she said.
But Jarrod Ball, the CEDA Chief Economist, is not so convinced. “With growing inflationary pressures and interest rate rises on the horizon, cost-of-living pressures will not dissipate any time soon and these measures do not provide a long-term solution,” he shared.
“The Federal government has made it clear that it is relying on strong business-led growth to drive Australia’s economic recovery, yet the Budget does not go far enough to support this ambition.
“While we commend the initiative to shake up employee share schemes and support the growth of Australian start-ups, this Budget misses the opportunity to leverage investment in technology on larger, targeted and specific investments, such as quantum computing capacity, that can enhance Australian competitive strengths and skills,” he shared.
Solomon Lew, Chairman of Premier Investments, commended Federal Treasurer, Josh Frydeneberg, for his ‘sensible’ and ‘balanced’ budget. “I commend Treasurer Frydenberg and the Morrison Government on the 22-23 Federal Budget, delivered against a challenging backdrop of geo-political tensions, the pandemic, rising inflation and low unemployment,” he shared.
“The budget delivers immediate cost-of-living relief to millions of Australians, and continues investment in crucial areas including infrastructure, health, education and defence. It is a sensible, balanced and stable budget that highlights our nation’s economic resilience, prioritises investment for the future and ensures we maintain our triple-A credit rating,” Lew shared.
Lee Hardham, CEO of Brauz, shared his opinions about the Federal budget, and how it will impact the retail sector after a rough 18 months for the industry. “Retailers have had it tough during the pandemic,” he shared. “Almost 18 months of sporadic lockdowns were topped off with supply chain issues, staff shortages and the Omicron outbreak.
“Whilst consumer sentiment started looking up in February according to the ABS, the Consumer Sentiment Index declined 4.2 percent MoM in March as a result of concerns over the war in Ukraine, the floods in south-east Queensland and Northern NSW and expectations of higher inflation and interest rates. This is the weakest score since September 2020.
“There is a definite fear amongst the retail industry that consumer spending will take a nosedive as the uncertainty around the rapidly rising cost of living leads consumers to hold on tighter to their disposable incomes. Retailers themselves have faced rising costs of business, from costs of fabric to freight fees. Some, particularly smaller retailers, have been forced to pass these costs onto customers, further inflating the issue of living affordability,” he continued.
“As an industry, it’s pleasing to see some of the measures put in place by the government, like the petrol tax cuts, to minimise the impact of these rising costs. But we need to see this go further, including increased housing and childcare support, in order to prevent the damage from seeping into all areas of the economy.”
Paul Zahra, the CEO of the Australian Retailers Association also welcomed the measures in this year’s Budget, as well as the support from SMEs to further upskill staff and enhance the digital capabilities across the board.
Zahra further expressed his satisfaction with the budget for allocating funds towards encouraging smaller business to grow and upskill, while striking a balance between easing short-term cost pressures at the same time.
“Business costs are increasing, as staff shortages and supply chain delays and costs continue to bite, and we are pleased to see the government recognise the immediate inflationary pressures on vulnerable Australians which will have a flow-on benefit to retailers,” he said.
“However, business disruption remains an ongoing concern for Australian companies large and small with the conflict abroad creating a ripple of cost pressures for retailers and customers, and at home flooding has displaced thousands of Australians and impacted many businesses.
“Small businesses feel these impacts more given they do not have the same level of resources or cash reserves to cope with the uncertain economic environment and we are pleased to see this addressed in tonight’s Budget. Retail is Australia’s largest private-sector employer, and with the sector undergoing profound labour shortages and a skills deficit, it’s important the training measures apply to retail employers both large and small,” Zahra continued.
Further to the sentiment shared by Jarrod Ball, Zahra indicated that the short-term impacts are felt, but challenges remain for the medium and longer-term. “While the Budget provides much-needed relief in the short-term, by the way of tax offsets and cash payments, strategic challenges remain for the medium to long-term which must be urgently addressed if we are to retain our social and economic resilience,” he said.
“We cannot have an economic recovery without a retail recovery. Whilst retail overall is performing well, the business recovery remains elusive for some including CBD retailers, travel retail, hair and beauty, hospitality and small businesses who require a level of ongoing targeted support. Whilst the vast bulk of Covid restrictions have been removed, we’re yet to see much of an improvement in terms of foot traffic including the volume of CBD office workers.
“The next big global disruptor on our doorstep is climate change, and it’s playing out before our eyes with the recent floods in central Australia, NSW and Queensland. We have seen the business community take positive steps towards net-zero emissions, but this also needs to be supported by greater government action,” he said.
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